ELECTRONICS firm LG is to pay back nearly £35m of government grants to the Welsh Assembly.

The company received £87m from the public purse in 1997 after promising to create around 6,000 jobs in South Wales. But the collapse of the semiconductor market and Asian economies meant the jobs never materialised.

Welsh Economic Development Minister Andrew Davies said the former LG plant in Newport had been reclaimed as part of a settlement for the recovery of the grants.

He said the Assembly will be given land and buildings independently valued at £20m and LG Electronics had also paid £15m cash.

"We are all disappointed the LG project did not turn out as planned. We all have a public duty to ensure that public money must be used wisely," said Mr Davies.

It is the largest ever recovery of regional selective assistance grant.